Analyzing November HVAC Demand Trends
👋 Hey, Jon here! Each month, we publish PPC + Facebook performance trends for an anonymized sample of HVAC contractors from across the US that use our revenue flow analytics platform. I’ve seen more contractors asking about November trends, if leads are down, what the market is looking like, and if the macroeconomic indicators are starting to show themselves in our industry.
While every market (and business) is different, the general sentiment we’re seeing and hearing is that it’s tougher out there. We’re hearing (and the data shows) that customers are leaning more toward repairs than replacements, they’re getting estimates from more contractors than usual, declined for finance is creeping up, and general concerns about the recession are increasing.
It shouldn’t come as a surprise that demand is slowing, but it’s not all doom-and-gloom, there’s still plenty of demand, and plenty of opportunity to shift strategy and operations to capitalize on evolving customer behavior in this environment.
Let’s dive in!
While October was a bounce back month from a weaker September, November brings us a mixed bag of data that gives us insights about the changing market environment (and also exposes KPIs that are not as important when it comes to impacting your business outcomes).
Let’s have a look:
Lead Volume: ⬆️ 10%
Cost per Booked Job: ⬆️ 8.8%
Average Ticket: ⬇️ 15.9%
Booked Jobs: ⬇️ 0.7%
Match Rate: ⬇️ 13.1%
Closed Revenue: ⬇️ - 18.8%
There are a few key patterns I notice in this data:
It’s encouraging to see that lead volumes were up 10% month-over-month, but, as you’ll see, it’s only a very small part of the story for the business outcomes we’re looking for: closed revenue.
Note: This is why ‘more leads’ isn’t the only answer as you’ll see below. It’s part of the picture, but not the whole thing. This is a critical mindset (looking at the full customer journey) to bring with you as you start to optimize your business in the current state of the market.
(2) Booked jobs dropped 0.7% month-over-month (11 fewer booked jobs than October). This is a pretty negligible change, but give the fact that leads were up 10%, this suggests a lower percentage of them were ready-to-buy, more of them shopped around, more went with someone else, etc.
Note: Use booked job rate (the % of leads that turn into sold or closed jobs) to double check your ad strategy with your vendor. Are targeting areas up-to-date? Do you have quality landing pages on the services you offer? Are your specials up-to-date on the website and in the copy? Has your capacity changed recently?
(3) Average tickets dropped by ~16% - when diagnosing revenue changes in a business, average ticket is a critical KPI to look at because it tells a story about the type of work being performed, willingness to pay, etc.
Note: for example, service jobs made up 32% of total booked jobs this month versus 29% the prior month. Installations also increased, but by 1%, and the average tickets for those dropped. There were also 6% less estimates given in November (a lagging indicator that install demand at the start of December might be softer).
(4) Closed revenue dropped by 18.8% - this is ultimately what we care about, but it’s important to understand the entire revenue flow journey and different steps that influence this number. There were more leads, but slightly fewer booked jobs.
Those booked jobs cost 8.8% more from the last month, and on average those customers were billed about 16% less.
The key takeaway for November is this:
Lead volume was up 10% in November, but closed revenue dropped by 18.8%, so to optimize your business for better outcomes during weaker demand / more competitive environments, go beyond looking at just lead volume and think about things like the type of work performed, estimates given, estimates won, discounts you’re offering, and lagging indicators like estimates, especially at the back-end of the month, to know what’s in the pipeline etc.
What Changed About How Customers Converted on HVAC Websites in November?
Each month, I look at how customers converted on HVAC websites after coming from a PPC or Facebook ad (as well as other channels).
The below data shows the percentage of total closed revenue from PPC / Facebook leads that converted by each tool, as well as the change from the previous month:
📱Phone - 65% (-8% MoM)
📝 Form - 15% (+3% MoM)
⌨️ Chat - 12% (+7% MoM)
📅 Online Scheduling - 8% (-1% MoM)
In October, 73% of closed revenue from PPC and Facebook converted via phone calls, but this month, that number dropped by 8%.
Forms and chats converted 10% more of the total revenue than the previous month, and online scheduling dropped by 1%.
So why do these changes matter, and why should you care about them?
Because it matters just as much how a customer converts on your website as how they got there in the first place.
If you agree that looking at lead volume doesn’t provide the full picture of why revenue might be up or down, you can use this conversion data to take a few actionable steps for your business:
(1) If you don’t have a chat tool on your website, consider adding one - if customers are shopping around more, convenience may help get more website visitors to convert and give you a shot at their business
(2) Make sure your form lead response process is dialed in - consistently I see forms get lost and not responded to quickly and based on November’s data, that was the second biggest source of closed revenue
(3) Triple check your online scheduling tool to ensure you have the right service area zip codes and appointment availability - customer’s may be more demanding during this time and more willing to put in the work to contact more contractors, so make sure you have near-term availability
(4) Focus on follow-up - with fewer estimates given in November, more consistent follow-up would help in trying to close some of the deals to set-up December. With less demand and the same supply (competition), customers get to be more picky. Tech turnovers might also need to become a focus area if less people are outright saying they need a replacement.
Closing Thoughts
We’re certainly seeing some of the macroeconomic trends impact demand, but again, it is not all doom and gloom.
I see this as an opportunity to get granular and dial-in the entire customer experience from lead to sold job to follow-up and align your entire gamut of digital marketing strategies (website, conversion tools, automation tools, revenue attribution) to fine-tune your business so that when things do pick-up, you’ll be more efficient and capable than ever before.
In upcoming newsletters, I’ll dive into some basic and advanced techniques to predict demand in your market, as well as more detailed data analysis that you can apply within your business.
Until next time…
-Jon